EUR/USD: Sidelined below 38.2 Fib, focus on German services PMI

• EUR/USD is flatlined below the key Fib level of 1.1296. 
• Markit German Services PMI (Jun) is forecasted to remain unchanged. 
• Markets may offer USD on fears the US-China trade truce is temporary. 

The shared currency is struggling for direction ahead of the European session with the EUR/USD pair sidelined below 1.1296 – the 38.2% Fibonacci retracement of the rally from 1.1107-1.1412. 

Markit Services PMI (June) for Germany, scheduled for release at 07:55 GMT, is expected to show the pace of expansion of the activity remained unchanged in the final month of the second quarter. The index is forecasted to match May’s reading of 55.6. 

It is worth noting that the manufacturing activity contracted for the sixth consecutive month in June. As a result, service sector activity associated with the manufacturing sector may have experienced a slowdown as well. 

Put simply, the German services PMI could print below estimates. 

The common currency, however, may show resilience and rise above 1.13 if the US treasury yields continue to slide. As of now, the 10-year yield is trading below 2% – the lowest level since November 2016. 

Also, major investment banks believe the US-China trade war could reignite anytime and hence could offer US dollars, helping EUR/USD stay bid. As of writing, the pair is trading largely unchanged on the day at 1.1287.

Technical levels